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Economists at the country's largest lender, SBI, today said they see India's Q2 real GDP growth slowing down further to 6.5% in the September quarter of this fiscal year. Amid concerns over the country's economic growth rate and whether it is slowing down, the analysts said they expect FY25 growth to come "closer to" 7%. SBI analysts join a long line of agencies like Fitch, ADB, IMF, Moody, World Bank, S&amp;P, and even RBI in forecasting India's GDP growth for FY25 in the range of 6.8% to 7.2% for FY25, driven by robust consumption and investment. SIP inflows have been at an all-time high, and so has QIP (qualified institutional placement) fundraising. As many as 71 companies raised Rs 88,678 crore this year through QIPs. Activity in Indian primary markets also remained robust, with 78 mainboard IPOs in 2024; this is a 111% rise from just 38 listings in FY23. Between April and June 2024, India's real GDP grew by 6.7%, the lowest growth seen in 15 quarters, pushing experts to believe that India is caught in a cycle of slowdown. "There is some incipient pressure evident on the domestic economy. Based on our analysis of 50 meaningful leading indicators (both consumption and demand-centric), a dip looks plausible across select cohorts of agriculture, industry, and services in Q2," the <keyword id="22337294" type="General" weightage="20" keywordseo="SBI-economists" source="keywords">SBI economists</keyword> added. Stating that they track 50 indicators to gauge economic activity, SBIs note said the proportion of indicators showing acceleration declined to 69% in Q2 FY25, as against 80% in Q2 FY24 and 78% in Q1 FY25. However, things might be changing now, given that rural demand has started looking up amidst muted urban demand. SBI also explained that the ongoing regulatory tightening on unsecured lending and roadblocks that are hindering rollover/refinancing of debt through unsecured credit are dismantling the unwarranted exuberance that had built up post-pandemic, especially in the urban areas. Madhu Lunawat, CIO &amp; Fund Manager, Bharat Value Fund states that the overall investment environment remains strong due to favorable economic conditions supporting government policies &amp; reforms. "The sustainable inflow from domestic investors is going to support the Indian equity market in any kind of correction. The long-term bullish structure of Indian economy will continue to attract new domestic &amp; global investors to participate in India’s growth story through various Investment avenues.” <h2>Rate cuts not on cards</h2>RBI Governor Shaktikanta Das clarified today that changing the monetary policy stance to 'neutral' does not mean a rate cut is imminent in the central bank's next policy announcement. Notably, RBI MPC is set to meet between December 4 and 6, 2024, to decide if the prevailing repo rate of 6.5%, which has stayed unchanged for the last 2 years, should be brought down or not. In its last meeting, The <keyword id="20501100" type="General" weightage="20" keywordseo="RBI-monetary-policy" source="keywords">RBI monetary policy</keyword> committee had shifted its stance to 'neutral' indicating that it is open to adjusting interest rates based on economic conditions. "It should not be assumed that we have done this, so therefore the next step is a rate cut. A change in stance doesn't mean that the next step is a rate cut in the very next meeting. It's not so," Das said. Das also cautioned that inflation remains a key factor, and inflation and CPI prints for October are expected to stay high.

SBI economists see Q2 GDP growth slowing down to 6.5%; FY25 growth to be closer to 7%

New Delhi [India], June 5 (ANI): The Bharatiya Janata Party (<keyword id="19894848" type="General" weightage="20" keywordseo="bjp" source="keywords">BJP</keyword>)-led National Democratic Alliance (<keyword id="19938590" type="General" weightage="20" keywordseo="NDA" source="keywords">NDA</keyword>) secured a majority in the general elections, securing a third term for Prime Minister Narendra Modi. This victory indicates continuity in policy, particularly in <keyword id="21785272" type="General" weightage="20" keywordseo="infrastructure-spending" source="keywords">infrastructure spending</keyword> and boosting domestic manufacturing, which are expected to support robust <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>. However, the NDA's slim margin of victory and the BJP's loss of an outright majority in parliament may slow down more extensive economic and fiscal reforms, potentially impeding <keyword id="20101140" type="General" weightage="20" keywordseo="fiscal-consolidation" source="keywords">fiscal consolidation</keyword> efforts. In fiscal 2023-24, India's real GDP accelerated to 8.2 per cent from 7.0 per cent the previous year, driven by significant gains in gross fixed capital formation as the government's infrastructure programs gained momentum, even as private consumption remained subdued. <keyword id="20227907" type="General" weightage="20" keywordseo="Moodys" source="keywords" meta.keywordsubtype="org" meta.entityname="Moody's" meta.hostid="261" meta.entityid="Moody's">Moody's</keyword> projects India's economic strength to continue, with an anticipated real <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> of around 7 per cent over the three-year period from fiscal 2023-24 to 2025-26. This growth is expected to benefit from ongoing infrastructure development and digitalization efforts. Despite this outlook, structural weaknesses pose risks to long-term growth potential. High youth unemployment and low productivity growth in the agriculture sector constrain economic expansion. The agricultural sector's modernization has been stalled by political challenges, as evidenced by the repeal of key reforms in 2021 following widespread farmer protests. Additionally, gains in manufacturing have been uneven, limiting labour force diversification away from agriculture, which still accounts for 40 per cent of total employment. Foreign direct investment (FDI) inflows have declined over the past three years, despite a favourable geopolitical climate amid US-China tensions. This trend suggests persistent constraints within India's investment climate. To address these challenges, further structural reforms and enhanced implementation of existing initiatives, such as the production-linked incentive schemes to promote manufacturing, calibrated liberalisation of cross-border trade, and reconsideration of labour reforms, are necessary. The government's focus on fiscal consolidation is expected to continue, but significant improvements in debt ratios and interest servicing have yet to be realised. Since the trough in fiscal 2020-21, the central government's deficit has likely narrowed for three consecutive years. The interim budget for fiscal 2024-25 projects a deficit of around 5 per cent of GDP, aiming for a 4.5 per cent deficit by fiscal 2025-26. However, India's fiscal consolidation post-pandemic has not outpaced other emerging markets in Asia-Pacific, and its fiscal and debt metrics remain weaker than those of Indonesia, the Philippines, Thailand, and other Baa-rated peers globally. India's general government debt is projected to stabilise above 80 per cent of GDP over the next three years, compared to 70.5 per cent in fiscal 2018-19. General government interest payments are forecast to fall to around 24 per cent of general government revenue over the next two years, down from over 28 per cent in fiscal 2020-21, but still higher than the pre-pandemic ratio of less than 23 per cent. While increased budgetary allocations for infrastructure indicate an improvement in spending quality, debt servicing remains a significant portion of expenditure, reflecting ongoing constraints on fiscal flexibility. This situation underscores the need for the incoming government to balance fiscal consolidation with growth-supportive measures. The upcoming final budget for the fiscal year ending March 2025 will provide further insights into India's fiscal policy direction through 2029. As the Modi administration embarks on its third term, the focus will likely remain on sustaining economic growth while addressing the persistent <keyword id="21500054" type="General" weightage="20" keywordseo="fiscal-challenges" source="keywords">fiscal challenges</keyword> that hinder India's long-term economic potential.

Modi 3.0 will offer policy continuity, but BJP's loss of outright majority may slow down fiscal reforms: Moody's

<ul class="summary-list"><li>Moody's told staff in China to WFH before it slashed the country's credit rating. </li><li> Two employees told the FT they believed this was because the company feared retaliation.</li></ul>A US ratings agency reportedly told its employees in China to work from home the week it delivered a damning assessment of the country's economy.Moody's told its China-based staff not to come into the office shortly before it slashed the country's credit rating, per <a target="_blank" href="https://www.ft.com/content/d488bcb8-1ac1-4551-bb8f-49fe6c990ce2">the Financial Times.</a> Two unnamed employees told the FT they believe this is because Moody's was worried it might be questioned by Chinese officials in retaliation.Workers in Beijing and Shanghai were instructed to stay home days before Moody's announced it was <a target="_blank" href="https://www.businessinsider.com/china-economy-debt-crisis-moodys-bonds-evergrande-stock-market-analysis-2023-12">cutting its outlook for the country from "stable" to "negative,"</a> and staff in Hong Kong were reportedly told to avoid traveling to the Chinese mainland."They didn't give us the reason … but everyone knows why," one China-based Moody's employee told the FT. "We are afraid of government inspections.""The Chinese authorities can make trouble for you if they want to," another employee said, who said that Moody's was concerned about what regulators might do following the credit downgrade."Our commitment to maintaining the confidentiality and integrity of the ratings process is paramount and therefore, we cannot comment on internal discussions," a Moody's spokesperson said in a comment to Business Insider. It comes as Western companies operating in the country <a target="_blank" href="https://www.businessinsider.com/china-apple-foxconn-west-business-tax-espionage-2023-10">face increasing pressure</a> amid rising tensions between the US and China, with the US government hitting its geopolitical rival with a series of sanctions in an attempt to cripple China's microchip industry.The offices of US firms Mintz Group, <a target="_blank" href="https://www.cbsnews.com/news/china-raids-arrests-us-business-capvision-bain-mintz-group-security-crackdown/">Bain &amp; Company, and Capvision</a> were all raided earlier this year by Chinese authorities, with some <a target="_blank" href="https://www.bbc.com/news/world-asia-china-65061116">employees being questioned and detained</a>.American companies have also been targeted in other ways, with Chinese regulators effectively scuttling <a target="_blank" href="https://www.nytimes.com/2023/08/16/business/intel-tower-semiconductor-china.html">Intel's $5.4 billion acquisition of Israeli microchip firm Tower Semiconductor</a>, and the Chinese government <a target="_blank" href="https://www.businessinsider.com/china-iphone-ban-office-workers-worry-bosses-apple-huawei-2023-9">banning some officials from using Apple's iPhones</a>.<a target="_blank" href="https://www.businessinsider.com/china-business-risks-sanctions-detentions-us-tensions-espionage-law-2023-5">Updates to its anti-espionage laws, which were passed in April,</a> are also making it tougher for US businesses to operate in China.Despite this, many Western firms seem reluctant to leave unless they have to.<a target="_blank" href="https://www.businessinsider.com/jpmorgan-jamie-dimon-would-cut-ties-with-china-geopolitical-tensions-2023-11">JP Morgan boss Jamie Dimon</a> told the New York Times' Dealbook conference that while the Wall Street bank would pull out of China if the US government ordered it to do so, he didn't think that was likely to happen — unless China invaded Taiwan.The anxiety over operating in China comes as Xi Jinping's regime attempts to kick-start the country's stuttering economy.Moody's warned that China's <a target="_blank" href="https://www.businessinsider.com/china-economy-debt-crisis-moodys-bonds-evergrande-stock-market-analysis-2023-12">stagnant growth and ongoing property crisis</a> could leave it struggling to pay its debts, and said it expected GDP to grow by just 4% in 2024 and 2025.The rating agency's analysis prompted a fierce response, with China's Ministry of Finance <a target="_blank" href="https://www.reuters.com/breakingviews/china-credit-warning-is-well-timed-plea-action-2023-12-06/#:~:text=China%20is%20%E2%80%9Cdisappointed%E2%80%9D%20with%20the%20outlook%20decision%2C%20an%20official,and%20fiscal%20sustainability%20are%20unwarranted.&amp;text=Our%20Standards%3A%20The%20Thomson%20Reuters,are%20those%20of%20the%20author.">saying it was "disappointed</a>" by the decision and the National Development and Reform Commission <a target="_blank" href="https://www.ft.com/content/d488bcb8-1ac1-4551-bb8f-49fe6c990ce2">criticizing the move</a> as driven by "bias and misunderstanding of China's economic outlook".

Moody's told staff to WFH before it slashed China's credit rating as it feared authorities might retaliate: report

<keyword id="19896016" type="General" weightage="20" keywordseo="new-delhi" source="keywords">New Delhi</keyword> [<keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>], March 11 (ANI): Global rating agency Moody's expects India's economic growth in 2024-25 growth above that of other emerging market G20 peers, given its domestic demand managed to sustain momentum. India's real GDP growth accelerated to 8.4 per cent year over year in the October-December quarter of 2023, up from upwardly revised prints of 8.1 per cent in July-September and 8.2 per cent in April-June. The global rating agency Moody's attributed India's firm growth primarily to solid capital expenditure, defying private consumption which remained "sluggish" amid still-weak rural demand. On the supply side, an 11.6 per cent surge in manufacturing output and strong service sector activity more than offset a decline in agricultural output in India, it said. Even so, it said high-frequency indicators, including expanding <keyword id="20905252" type="General" weightage="20" keywordseo="purchasing-managers" source="keywords">Purchasing Managers</keyword>' Index (PMI), rising auto sales, consumer optimism and double-digit credit growth, suggest that the economy's strong October-December momentum carried into January-March this year. "Some of the large emerging market (EMs) countries stood out in 2023 for their resilient economies amid high-interest rates, exchange rate volatility, subdued capital flows and muted external demand. This year, we expect growth to slow across several major EMs as the economies transition to a post-pandemic steady growth path," Moody's said in its Macro Monday report, chaptered 'G-20 emerging markets are poised for growth stabilization'. In its recently published <keyword id="20905253" type="General" weightage="20" keywordseo="global-macro-outlook" source="keywords">Global Macro Outlook</keyword>, it forecasted G20 emerging market growth to stabilize around 4.0 per cent in 2024 and 2025, down from 4.7 per cent in 2023 as global monetary policy gradually normalises. On an annual basis, domestic demand was the primary engine of growth in several G20 emerging markets. "We believe growth cycles in India and Indonesia are at their peak, Brazil and Mexico are likely past their peak, and <keyword id="19899437" type="General" weightage="20" keywordseo="south-africa" source="keywords">South Africa</keyword>'s growth has likely troughed. Nevertheless, we expect relatively stable growth at close to potential in 2024 and 2025 for most G-20 EMs." On the policy side, the rating agency expects continuity after the general election in April-May and continued focus on infrastructure development. It forecasts India's real GDP to grow about 6.8 per cent in 2024 and 6.4 per cent in 2025, from 7.7 per cent in 2023. India's GDP grew at a massive 8.4 per cent during the October-December quarter of the current financial year 2023-24 and the country continued to remain the fastest-growing major economy. The Indian economy grew 7.8 per cent and 7.6 per cent during the preceding two quarters - April-June and July-September. The strength of domestic demand has driven the economy to a 7 per cent plus growth rate in the last three years. India's economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22, respectively. In the next three years, India is expected to become the third-largest economy in the world, with a GDP of USD 5 trillion. India can aspire to become a USD 7 trillion economy in the next six to seven years (by 2030), India's finance ministry recently asserted. (ANI)

Domestic demand to keep India's growth above other G20 emerging markets: Moody's

<ul class="summary-list"><li>A government shutdown would be "credit negative" for the US debt rating, Moody's warned Monday.</li><li>A shutdown would highlight how political polarization is weakening fiscal policymaking, it said.</li></ul>A government shutdown would be "credit negative" for the US debt rating, <a href="https://www.moodys.com/research/Political-Risks-US-FAQ-Potential-credit-implications-of-a-government-Sector-In-Depth--PBC_1382084" target="_blank" rel="noopener">Moody's Investors Service warned</a> on Monday.The credit rating agency, which is the last major outfit that still gives the US a top score, highlighted how political dysfunction is a burden on the country's financial wellbeing.While a shutdown wouldn't impact debt service payments, "it would underscore the weakness of US institutional and governance strength relative to other Aaa-rated sovereigns that we have highlighted in recent years," Moody's explained.Meanwhile, an extended shutdown would be disruptive to the US economy and financial markets, with potential negative ramifications for debt affordability, it added.And coming just months after the brinkmanship over the US debt ceiling, "a government shutdown would demonstrate the significant constraints that intensifying political polarization continue to put on US fiscal policymaking during a period of declining fiscal strength, driven by persistent fiscal deficits and deteriorating debt affordability," Moody's said. If US lawmakers don't agree on a spending bill for the next fiscal year, which starts October 1, the government will shut down this weekend.The statement from Moody's echoed the sentiment from Fitch Ratings earlier this year. Although the US avoided a catastrophic default on its debt over the summer, the <a href="https://www.businessinsider.com/fitch-downgrades-us-credit-rating-deficit-debt-ceiling-2023-8">debt ceiling fight prompted Fitch to downgrade the country's credit</a>."In Fitch's view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025," the agency said.Moody's also noted that <a href="https://markets.businessinsider.com/news/bonds/us-debt-interest-payments-federal-budget-deficit-social-security-medicare-2023-9">US debt service costs</a>, which are rising due to higher interest rates and debt, mean the government will have less fiscal flexibility.And mobilizing enough political support to pass a comprehensive plan for tackling the explosion in deficits via entitlement reform and increased revenue "appears extremely difficult in the current highly polarized political environment," it said."Looking ahead, weaker fiscal policymaking that leads to persistently high fiscal deficits and higher-than-expected interest costs would put pressure on the US rating or outlook," Moody's warned.

Moody's warns government shutdown would be negative for US debt rating as it would highlight weak governance

<ul class="summary-list"><li>The US unemployment rate rose from 4.1% in June to 4.3% in July.</li><li>The economy added 114,000 jobs, less than economists had predicted.</li></ul>The unemployment rate unexpectedly jumped in July, climbing to 4.3% from 4.1%.US nonfarm payrolls also came in light, with the economy adding 114,000, missing the consensus expectation of 176,000. The Bureau of Labor Statistics also revised May and June job additions lower.The weak report all but confirms the Federal Reserve will cut interest rates in September, an outcome that was <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">already carrying a near-100% probability</a> heading into the report.<a target="_blank" class="" href="https://www.investing.com/indices/us-spx-500-futures?cid=1175153">Stock futures</a> slid following the jobs report.Friday's jobs report comes after this week's Federal Open Market Committee meeting, where the <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-likely-september-federal-reserve-holds-steady-july-2024-7">Federal Reserve held interest rates steady once again</a>. Market traders and economists <a target="_blank" href="https://www.businessinsider.com/interest-rate-cuts-september-not-july-inflation-federal-reserve-powell-2024-7">didn't expect a cut to happen in July</a> anyway, despite data suggesting one could happen soon. "I think it's past time for them to cut interest rates," Mark Zandi, chief economist of Moody's Analytics, told Business Insider in July. "I think they have achieved their objective of full employment and inflation at target."During a Wednesday press conference, Fed Chair Jerome Powell said of the outlook for rate cuts later this year that he "can imagine a scenario in which there would be everywhere from zero cuts to several cuts, depending on the way the economy evolves.""The question will be whether the totality of the data, the evolving outlook, and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market," Powell said. "If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September."Data from the <a target="_blank" class="" href="https://www.bls.gov/jlt/">Bureau of Labor Statistics</a> published Tuesday showed the number of quits in June dropped by 121,000 from May's level. There were around 3.3 million quits in June and the quits rate was 2.1%. The layoffs and discharges rate was 0.9% in June; the last time it was this low was in April 2022. There were around 8.2 million job openings in June, similar to May's level."Overall, a broad set of indicators suggests that conditions in the labor market have returned to about where they stood on the eve of the pandemic — strong but not overheated," Powell said in his opening statement at the press conference on Wednesday.This is a developing story. Please check back for updates.

Unemployment unexpectedly rose in July as pressure ramps up for the Fed to cut interest rates

<ul class="summary-list"><li>Trump told Bloomberg Businessweek the Fed should not cut rates before the presidential election.</li><li>However, some economists and lawmakers say cuts should happen soon.</li></ul>Former President Donald Trump said the Federal Reserve should not cut <a target="_blank" href="https://www.businessinsider.com/fed-interest-rate-cuts-should-happen-in-july-not-september-2024-7">interest rates</a> before the presidential election, according to an interview he did with <a target="_blank" href="https://www.bloomberg.com/features/2024-trump-interview/">Bloomberg Businessweek</a>.In a June 25 interview that was published on July 16, Trump said the Fed may cut rates before the election, but it's something Fed Chair Jerome Powell and Fed members "know they shouldn't be doing."His comments are at <a target="_blank" href="https://www.businessinsider.com/interest-rate-cuts-timeline-federal-reserve-inflation-powell-economists-forecast-2024-7">odds</a> with what some economists and <a target="_blank" href="https://www.businessinsider.com/when-will-fed-cut-interest-rates-elizabeth-warren-powell-rent-2024-1">Democratic lawmakers</a> have said about the need for cuts soon.Mark Zandi, chief economist of Moody's Analytics, told Business Insider that when rate cuts do happen, it could "provide immediate relief" for consumers, small businesses, and lower- and middle-income households. For instance, interest rates on credit cards could come down, he said, which would benefit consumers.Trump's remarks echo his <a target="_blank" href="https://www.businessinsider.com/trump-interest-rate-cuts-powell-help-democrats-win-elections-inflation-2024-2">previous claims</a> that the Fed could become politicized ahead of the presidential election as opinions on the timing of interest rate cuts split across party lines. The Federal Open Market Committee has two interest rate decisions scheduled before the election in July and September.The Federal Reserve is meant to operate <a target="_blank" class="" href="https://www.federalreserve.gov/faqs/why-is-it-important-to-separate-federal-reserve-monetary-policy-decisions-from-political-influence.htm">independently</a> and apolitically."Congress has entrusted the Federal Reserve with operational independence that is needed to take a longer-term perspective in the pursuit of our dual mandate of maximum employment and stable prices," Powell <a target="_blank" href="https://www.federalreserve.gov/newsevents/testimony/powell20240709a.htm">said</a> before the Senate Committee on Banking, Housing, and Urban Affairs on July 9.The FOMC monitors economic data to decide when to cut rates without spurring inflation. According to <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">market predictions</a>, the central bank is expected to once again hold rates steady during its July meeting but potentially cut in September.Trump said the Fed has a "dream" to lower interest rates, but he'd advise against it. "Right now, you have to keep rates where they are," he said, citing general inflation as a concern."Inflation is a country buster," Trump said, and while he said he knows Fed members want to cut interest rates, he would not do so before the presidential election.June <a target="_blank" class="" href="https://www.businessinsider.com/inflation-cpi-june-prices-food-energy-fed-interest-rate-cuts-2024-7">inflation</a> data showed consumer prices increased 3% year-over-year, the lowest rate in a year. Some <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-timeline-federal-reserve-inflation-powell-economists-forecast-2024-7">economists think it's time to cut rates</a>, with cooling inflation and job growth suggesting the Fed's job is already mostly done."I think it's past time for them to cut interest rates," Zandi said. "I think they have achieved their objective of full employment and inflation at target."Meanwhile, Claudia Sahm, chief economist at investment management firm New Century Advisors and former Fed economist, said indicators show it's time to cut rates."We have seen the US economy has been getting back on track, normalizing, rebalancing, all of the Fed's catchwords for some time now," Sahm said.Zandi thinks the Fed will start making rate cuts in September. He noted that the bar for cuts is higher than it typically is because the Fed fears a reacceleration of inflation. He also noted that the election a few months away could play a role."They're thinking maybe if they start cutting rates, they're going to be brought into the political debate, and it's a pretty uncomfortable place to be," he said.This isn't the first time Trump has criticized Powell and the FOMC's interest rate decisions. During a February interview with Fox News, <a target="_blank" href="https://www.businessinsider.com/trump-interest-rate-cuts-powell-help-democrats-win-elections-inflation-2024-2">Trump accused Powell of being "political"</a> and planning interest rate cuts to coincide with the election."I think he's going to do something to probably help the Democrats, I think, if he lowers interest rates," Trump said, adding that "it looks to me like he's trying to lower interest rates for the sake of maybe getting people elected."Powell has consistently maintained the Federal Reserve is an independent entity that does not consider politics or policymaking in its decisions. Powell <a target="_blank" href="https://www.businessinsider.com/interest-rate-cuts-presidential-election-wont-impact-timing-powell-trump-2024-4">said in April</a> during Stanford's Business, Government, and Society Forum that "our analysis is free from any personal or political bias, in service to the public.""But our decisions will always reflect our painstaking assessment of what is best for our economy in the medium and longer term — and nothing else," Powell said.Zandi said the Fed may want to have a few more months of "good inflation statistics" — like the consumer price index data for June, which was released on July 11 — so that it can "mitigate the risk that they become politicized."Trump <a target="_blank" href="https://www.businessinsider.com/donald-trump-campaign-fed-independence-jerome-powell-interes-rates-politics-2024-4">allies</a> were reportedly writing a plan to curb the independence of the Federal Reserve and <a target="_blank" href="https://www.businessinsider.com/trump-interest-rate-decisions-restructure-federal-reserve-jerome-powell-wsj-2024-4">allow Trump to have a say</a> in interest rate decisions should he win the upcoming election, according to The Wall Street Journal.Trump told Bloomberg Businessweek that while he's had his "own disputes" with Powell, he would allow him to finish his term as Chair of the Federal Reserve if Trump thought he "was doing the right thing."

Trump doesn't think interest rate cuts should happen before the election 

<ul class="summary-list"><li>The Federal Reserve will make its next interest rate decision at the end of July.</li><li>Some economists said the economy is ready for the Fed to cut interest rates.</li></ul>After years of high interest rates to combat soaring inflation, some economists think the time has finally come for the nation's central bank to give Americans financial relief by cutting those rates.Lower rates would allow Americans to take out cheaper loans, helping out businesses and consumers.Mark Zandi, chief economist at Moody's Analytics, said that when cuts do come, he expects them to "provide immediate relief" to small businesses, consumers, and lower- and middle-income households. Business owners may find it easier to take out bank loans and consumers who rely on credit cards could end up with cheaper borrowing costs.But those cuts may not be here just yet. At the end of July, the Federal Open Market Committee will announce its <a target="_blank" class="" href="https://www.businessinsider.com/fed-interest-rate-cuts-should-happen-in-july-not-september-2024-7">next decision on interest rates</a>. <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch</a>, which estimates interest rate probabilities based on market trades, forecasts a 93% chance the Fed will hold rates steady — and Fed Chair Jerome Powell has emphasized that the Committee needs to feel confident inflation is cooling enough before the Fed starts to cut.It's a delicate balancing act between risking a recession and renewed price spikes. "If we loosen policy too late or too little, we could hurt economic activity," Powell <a target="_blank" href="https://www.youtube.com/watch?v=vv6n0oTJMRU">said</a> before the Senate Committee on Banking, Housing, and Urban Affairs on July 9. "If we loosen policy too much or too soon, then we could undermine the progress on inflation."But many long-time Fed watchers and macroeconomists think the war on inflation has been won, and it's time to cut.Zandi thinks the Fed has "achieved their objective of full employment and inflation at target."Claudia Sahm, founder of Sahm Consulting and former Fed economist, agrees. "Frankly, it's been time for a while," Sahm told Business Insider. "We have seen the US economy has been getting back on track, normalizing, rebalancing, all of the Fed's catchwords for some time now."The consumer price index, which measures inflation, <a target="_blank" href="https://www.businessinsider.com/inflation-cpi-june-prices-food-energy-fed-interest-rate-cuts-2024-7">rose 3.0%</a> year over year in June — a decrease from May's 3.3% reading — showing that inflation is inching toward the Fed's 2% target. Real US GDP has already been growing at a cooler rate. It increased 1.4% at an annualized rate in the first quarter of 2024 after a 3.4% increase in the fourth quarter of 2023. The <a target="_blank" class="" href="https://www.businessinsider.com/unemployment-rate-job-growth-june-economic-data-2024-7">labor market</a> has seen the unemployment rate climb to above 4%, and job gains have cooled, though the <a target="_blank" class="" href="https://www.businessinsider.com/what-is-going-on-with-economy-recession-unemployment-inflation-gdp-2024-5">US remains far from a recession</a>.As Powell has consistently said, cutting interest rates too early could end up hurting Americans if it requires the Fed to hike again at a later time. But keeping interest rates high for too long also has consequences — it's keeping <a target="_blank" href="https://www.businessinsider.com/how-do-interest-rate-hikes-impact-housing-market-rent-mortgages-2024-3">housing costs high</a>, businesses are struggling to invest, and Americans are finding it more expensive to take out loans and different forms of credit.While economists who talked to BI described the current economy as good, they also noted that cutting interest rates could give Americans financial relief and help the economy thrive."Right now, the Federal Reserve with keeping interest rates high is putting pressure on the economy, is making it harder for consumers to buy," Sahm said. "They have to take out credit. It's making it harder for businesses to invest."<h2 id="fa2a601e-28f1-43b0-846d-f43eee7bd384">Why economists say it's time to cut interest rates</h2>For months, some Democratic lawmakers have been urging Powell to cut interest rates sooner rather than later to give Americans financial relief. Sen. Elizabeth Warren joined three of her Democratic colleagues in <a target="_blank" href="https://www.businessinsider.com/when-will-fed-cut-interest-rates-elizabeth-warren-powell-rent-2024-1">writing a letter</a> in January to Powell saying that "interest rates are still too high for many American families, who already cannot afford to pay rent or buy their first homes."Some economists have recently been pointing to similar concerns with the Fed keeping interest rates high. "We got inflation under control, but we could end up in a recession, or we could just end up in a much weaker economy than was necessary because it just waited too long," Sahm said.As Sahm pointed out, it would take time for reduced interest rates to "flow through to the economy.""You want to begin a process of taking the pressure off of the economy," Sahm said. "The best way to do this would be gradually."Waiting longer to start this gradual process of cuts could mean being up against unwelcome scenarios, such as the labor market taking "a turn for the worst," Sahm said. In that case, that could mean the Fed may have to make cuts more quickly.Brian Rose, senior US economist at UBS, told BI that if the Fed doesn't cut rates soon, there could be a "more serious slowdown in the labor market, undesirable rise in the unemployment rate, or more layoffs, and things like that.""The economy seems like it's already growing below trend, and if you leave rates at this level, which is quite restrictive, you can only expect the economy to slow further," Rose said.True to form, Powell has not given any indication as to when interest rate cuts might happen, but when they do, it could provide relief to businesses and consumers alike.Zandi said interest rates on credit cards and Buy Now, Pay Later rates could come down, along with a decline in auto lending rates and mortgage rates."Right now, we're at a 7% fixed mortgage rate, and that's just unaffordable for almost everyone," he said. "But if it gets closer to six, then I think that would make a big difference for people. And we see more home sales and transactions."Even Fed officials are pointing at recent economic data as proof relief will soon be warranted. Chicago Federal Reserve President Austan Goolsbee <a target="_blank" href="https://www.wsj.com/livecoverage/stock-market-today-bank-earnings-07-15-2024/card/interest-rate-cuts-will-soon-be-warranted-chicago-fed-s-goolsbee-says-MnwqFjEttmPMZIf9OvTc">told</a> The Wall Street Journal that the US economy has proven it's ready to ease up on tight monetary policy."You only want to stay this restrictive for as long as you have to, and this doesn't look like an overheating economy to me," Goolsbee said.

Lower interest rates could be coming soon. Here's what's at stake if they aren't.

<ul><li>The Indian rupee had been volatile for almost a year now and hit several fresh all-time lows as the US dollar strengthened against major global currencies.</li><li>The rupee weakness, according to Moody's, may slow in what it earlier expected India to be one of emerging Asia's best-performing economies.</li><li>Further currency weakness could put the region's central banks in a bind, said Moody's.</li></ul>New Delhi [India], March 23 (ANI): The risk of weakness in currencies in the emerging economies in Asia is worrisome, and more so the risk is greater in India with a new bout of rupee weakness, which could force the Reserve Bank of India to "press harder on the brakes", according to Moody's Analytics. The rupee weakness, according to Moody's, may slow in what it earlier expected India to be one of emerging Asia's best-performing economies. The Indian rupee had been volatile for almost a year now and hit several fresh all-time lows as the US dollar strengthened against major global currencies. In October 2022, the rupee breached the 83 mark for the first time in its history. The rupee is currently hovering above 82 per US dollar. Depleting forex reserves faced with the high cost of imported goods, and the ongoing monetary policy tightening by the <keyword id="6356435" type="General" weightage="50" keywordseo="us-federal-reserve" source="Orion">US Federal Reserve</keyword> triggered the currency's depreciation. Investors tend to move towards stable markets, such as the US, for better and stable returns amid any tight monetary policy. Typically, the RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee. "The risk of currency weakness in emerging Asia is especially worrisome given its status as the cradle of the EM (emerging market) recovery. Our outlook calls for economies in emerging Asia to handily outperform the rest of the EM cohort as China's rebound gains momentum and as pent-up demand, still on hold from the Delta wave in India and Southeast Asia, props up consumer spending," Moody's said in a report. "But further currency weakness could put the region's central banks in a bind," it said. About India's inflation, the report said it was no longer rising, but higher food prices were a key concern. "Although the (RBI February monetary policy) meeting's minutes showed only one member concerned with the Fed's pace of tightening, this could quickly change when the bank meets in April, especially if faster Fed tightening and market jitters cause the rupee to weaken further," the report said. The Monetary Policy Committee (MPC) of the RBI in the February meeting decided to raise the repo rate, at which the RBI lends money to all commercial banks, by 25 basis points to 6.5 per cent. The rate hiking spree started in May last year to check inflation. Since May last year, the RBI has increased the short-term lending rate (repo rate) by 250 basis points, to contain inflation, driven mainly by external factors, especially global supply chain disruptions following the Russia-Ukraine war outbreak. Retail inflation in India fell marginally but remained above RBI's 6 per cent upper tolerance band for the second straight month in February 2023, with the Consumer Price Index pegged at 6.44 per cent. In January, the retail inflation was 6.52 per cent. India's retail inflation was above RBI's 6 per cent target for three consecutive quarters and had managed to fall back to the RBI's comfort zone only in November 2022. Under the flexible inflation targeting framework, the RBI is deemed to have failed in managing price rises if the CPI-based inflation is outside the 2-6 per cent range for three quarters in a row. (ANI)

Greater risk of rupee weakness; RBI could press hard on brakes: Moody's

Credit rating agency Moody's Investors Service on Tuesday said it has withdrawn <keyword id="10924914" type="General" weightage="50" keywordseo="kalyan-jewellers-india-limited" source="Orion">Kalyan Jewellers India Limited</keyword>'s (KJIL) B2 long-term corporate family rating. The rating outlook prior to withdrawal was stable. "In view of the current market conditions, the company has pushed back its plans to access the international debt capital markets. Moody's has decided to withdraw the rating for its own business reasons," Moody's said. The Rs 9,056 crore revenue <keyword id="413856" type="General" weightage="80" keywordseo="kalyan-jewellers" source="Orion">Kalyan Jewellers</keyword> is the second-largest jewelry company in India. It also has operations in the <keyword id="30350" type="General" weightage="50" keywordseo="middle-east" source="Orion">Middle East</keyword>. The <keyword id="203261" type="General" weightage="50" keywordseo="kalyanaraman" source="Orion">Kalyanaraman</keyword> family (promoter family) and associated companies own 60.53 per cent of Kalyan Jewellers. <keyword id="15035127" type="General" weightage="50" keywordseo="highdell-investments-ltd" source="Orion">Highdell Investments Ltd</keyword>, an affiliate of private equity firm Warburg Pincus &amp; Company US LLC, has a direct stake of 26.36 per cent, said Moody's. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/sustainability/news/the-first-annual-breakthrough-agenda-reports-sets-out-priorities-to-rapidly-make-more-clean-technologies/articleshow/94321918.cms">The first annual breakthrough agenda reports sets out priorities to rapidly make more clean technologies</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/rally-in-banking-stocks-continue-as-credit-growth-picks-margins-get-a-boost/articleshow/94324519.cms">Rally in banking stocks continue as credit growth picks &amp; margins get a boost</a>

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